After getting 2017 off to a stellar start, the gold market has been under some pressure in recent weeks, declining by over $60 per ounce. The selling seen in recent sessions could potentially provide another opportunity to buy gold at lower levels.
The gold market apparently did not fully discount a March rate hike from the Fed. The central bank has taken a decidedly more hawkish tone in recent weeks, and essentially informed markets that a March hike was not only on the table, but now essentially a certainty.
Last Friday’s non-farm payrolls data likely erased any shred of doubt, and the Fed appears to have a green light for raising the Fed Funds rate another quarter point at the conclusion of its two day meeting tomorrow.
Investors will be paying close attention to the central bank’s commentary following the decision on rates, and markets appear to be bracing for even more hawkishness from the central bank.
The question no longer seems to be whether three rate hikes will be seen this year, the question now seems to be whether the Fed will lift rates four times this year.
The question for gold investors, however, may be: Does it really matter?
In our view, the same reasons for buying gold that existed six months ago and exist today will continue to exist in the months and years ahead.
The dollar index has been on the rise again based on the notion of higher rates and fiscal spending. It seems right now, capital is flowing into dollars rather than gold. This does make some degree of sense, given many of the current geopolitical issues being seen around the globe.
There may come a point, however, when the dollar trade is so full, and so bloated, that there will be nowhere for investors to turn-except to gold. Paper currencies have a tendency to lose purchasing power over time, and if the Fed is forced to aggressively debase the currency in order to spur inflation and manage the nation’s debt load, the flight from dollars into gold could be historic.
Right now, the markets are running on significant economic optimism, and that optimism could potentially continue for some time. This could potentially keep the arguably over-inflated stock market propped up a bit longer while also fueling more buying in dollars.
Until it doesn’t…
The bull market in stocks is over eight years old, and the next recession could be right around the corner. Europe could potentially see significant changes in the near-future, and demand for gold could potentially skyrocket.
Would you rather buy it now or later?
In our view, any further dips in gold may represent an excellent buying opportunity for the long-term investor, and adding gold to your holdings has never been easier.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold physical gold using your IRA account.
Don’t wait for the next major stock market collapse or for the great rotation from dollars to gold before taking action. Explore your options today. Call Advantage Gold at 1-800-341-8584 to get started.Tags: advantage gold, dollar index, Fed, gold, interest rate hikes, stock market rally